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Ohmagawd, Is This Pattern Bullish 4/21/23

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WHERE ARE WE NOW

1/ The FED stops printing (April 2022) 

2/ The government does not stop spending.

3/ ST treasuries become very attractive .....massive supply of bonds....limited supply of funds to buy said bonds.

4/ Bank depositors flee to ST treasuries.

5/ Its party time at the RRP!!!!!!

6/ THE FED/FHLB/FDIC bail out industrial complex replace the deposits lost by banks to ST treasuries.

7/ US Banking system saved till another day....sort of.

8/ They do not have to sell all their loss making long bonds and MBS.

9/ They all live happily ever after.....NOT.

BECAUSE:

10/ Bail out money from the complex is expensive.

11/ Goodbye NIM and bank profits.

12/ Bank stock prices not happy. 

I call all this Circular QE.

The FED is printing to fund the budget deficit.

Its just using the banks as an intermediary.

 

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1 hour ago, sandy beach said:

Presented without comment.

FuUwCLHaAAAZJAi.jpg

My bet is on a major European Insurer goes bust as the „Lehman Event“. We had negative interest rates for years in Europe. They were forced to go into Real Estate and Private Equity, fields where they have no experience with. This lead to classic misallocation of capital. Can‘t end well.

I know that bears run a bit if time here and that technicals are not very much in favour of bears, but I can‘t go long here for the long term here. Something is looming. It could be that British Pension fund thing was Bear Stearns and that SVB was Lehman. But I have my doubts. As long that is the case I won‘t go long for the kong term. Gimme the EMA 200 monthly and I will go long without any questions, otherwise not.

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On 4/22/2023 at 11:07 AM, fxfox said:

My bet is on a major European Insurer goes bust as the „Lehman Event“. We had negative interest rates for years in Europe. They were forced to go into Real Estate and Private Equity, fields where they have no experience with. This lead to classic misallocation of capital. Can‘t end well.

I know that bears run a bit if time here and that technicals are not very much in favour of bears, but I can‘t go long here for the long term here. Something is looming. It could be that British Pension fund thing was Bear Stearns and that SVB was Lehman. But I have my doubts. As long that is the case I won‘t go long for the kong term. Gimme the EMA 200 monthly and I will go long without any questions, otherwise not.

My reaction is this could play out over a longer period of time than many expect. The Fed is going to be tighter for longer and QT could go one for two more years. 2024-2025 could be the demise of much of the mezzanine ponzi finance and ZIRP and the Fed put. The insurers that sponsor the mezzanines are going to get hit hard by the FSOC and the Fed / Treasury are not going to bail them out this time. I totally agree with your take. ZIRP and the Fed put caused a massive mispricing of assets and misallocation of capital. Financing debt is going to go back into well regulated banks. Insurers are going to be declared systematically important and they will no longer be able to sponsor the mezzanine and will be better stress tested. We're going back to old school lending. The Fed's footprint in treasuries and MBS is going to decline and banks are going to have to make the market again. That is if we don't blow it all up first. Lots of room for mistakes. But no problem if the market is bullish in the meantime. It just gives more cover for the Fed to keep squeezing.

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WHERE WE ARE NOW.....2.0

1/ The FED is now into QE6.

2/ If it doesnt replace the deposits flowing out the banks will collapse....end of financial sytem.

3/ As long as the US government runs a defecit the deposits will continue to flow out into ST treasuries and the the FED will have to continue doing the Hans Brinker act and plug the gap.

4/ THE RRP will continue to increase because its the best way to hold ST treasuries.

5/ Absolutely no counter party risk as the FED can always just create money to pay out the reverse repo. No risk of government hard default. The risk is bourne by the FED.  

 

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I think thats the problem. To much knowledge that something may blow up.

sometimes you will have to wait like 5 years. maybe longer till crash.

I think its better to just buy/sell based on TA. be invested even in bad times, if you see a good TA chart. trade what you see (!)

Thats the main problem, problem with psyche, like mental health issue. 

I didt buy stocks in 2009-2011 for long term, just bought and hold it for some weeks. I was affraid to be invested due to news flow. That was a mistake. you have to look at charts and buy sell based on charts. Dont trade based on fundamentals or macro. You will lose your money or miss opportunity.

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8 hours ago, Jimbo said:

WHERE WE ARE NOW.....2.0

1/ The FED is now into QE6.

2/ If it doesnt replace the deposits flowing out the banks will collapse....end of financial sytem.

3/ As long as the US government runs a defecit the deposits will continue to flow out into ST treasuries and the the FED will have to continue doing the Hans Brinker act and plug the gap.

4/ THE RRP will continue to increase because its the best way to hold ST treasuries.

5/ Absolutely no counter party risk as the FED can always just create money to pay out the reverse repo. No risk of government hard default. The risk is bourne by the FED.  

 

No QE at present-Adler has pointed this out.

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The Fed is merely funding the withdrawals and transfers to the MMFs. There's a shortage of T-bills, so they deposit the cash in the Fed's RRP slush fund. It's just an automatic subsidy for MMF investors, i.e. the depositors who withdrew their cash from the banks. 

Complete bullshit. 

As long as the cash sits in the RRP fund, it's not bullish. It's only bullish if it starts to flow out, or the Fed forces it out. 

Ciao for now. 

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